Internet Library of Law
and Court Decisions

Edina Realty, Inc. v. TheMLSonline.com

Purchase Of Keyword Advertisements Use In Commerce Sufficient To Sustain Trademark Infringement Claim

The Court holds that the purchase of keyword advertisements triggered by a search containing another's trademark constitutes a use of that mark in commerce sufficient to give rise to trademark infringement claims.  The Court accordingly denied a motion by defendant The MLS Online.com to dismiss trademark infringement claims arising out of its purchase of keyword advertisements from Google and Yahoo that displayed 'sponsored links' to defendant's website when a user entered plaintiff's Edina Realty trademark as a search term.

The Court also denied defendant's motion to dismiss trademark infringement claims arising out of its use of plaintiff's mark in hidden text and links found on its website, and in the text of its sponsored links, which motion was premised on the ground that this was a permitted nominative fair use of plaintiff's marks.  Adopting the 'fair use' test followed by the Third Circuit, the Court held such uses of plaintiff's mark were not necessary to the description of defendant's product or services.

Finally, the Court dismissed trademark dilution claims advanced by plaintiff Edina Realty as a result of its failure to provide evidence of actual dilution.

MLS Online Uses Competitor's Trademarks In Hidden Text On Its Website, and To Trigger Keyword Advertisements

Plaintiff Edina Realty Inc. and defendant TheMLSonline.com ("MLS Online") are competitors that each offer real estate brokerage services to their respective customers.  Plaintiff is the largest real estate brokerage firm in the Midwest, and the owner of federal trademark registration for the mark "Edina Realty."

Defendant MLS Online operates a website at which it provides a number of services, including listings of available real estate throughout the United States.  Included within these listings are "Edina Realty listings."  Defendant uses plaintiff's trademark in a number of ways to bring this to the attention of consumers.  First, defendant purchases keyword advertisements from the search engines Google and Yahoo for plaintiff's "Edina Realty" trademark, and variants thereof, including "Edina Reality," a misspelling of plaintiff's mark.  Users who enter these keywords in searches are shown sponsored links that contain an advertisement for, and link to, defendant MLS Online's website.  Some of these 'sponsored link' advertisements have contained plaintiff's trademark.  Defendant has also used plaintiff's trademark in hidden text and links found on its website.  This text appears in a white font on a white background, and is designed to boost the responsiveness of defendant's site to a search for plaintiff's trademark.

After MLS Online refused to discontinue such uses of plaintiff's mark, Edina Realty commenced this suit, charging MLS Online with trademark infringement and dilution under federal and state law, as well as with unfair competition.

Use In Commerce

MLS Online moved for summary judgment, dismissing the trademark infringement claims arising out of its purchase of keyword advertisements triggered by a search for plaintiff's "Edina Realty" trademark, and variants thereof.  MLS Online argued that this did not constitute the requisite 'use in commerce' of plaintiff's mark necessary to sustain such a claim.  To prevail on a trademark infringement claim, the mark holder must establish that defendant, without authorization, used the markholder's mark in commerce in connection with the sale or advertising of goods or services.

The Court rejected this argument, holding that MLS Online had, by purchasing such key word advertising, used Edina Realty's mark in commerce.  Said the Court:

While not a conventional "use in commerce," defendant nevertheless uses the Edina Realty mark commercially.  Defendant purchases search terms that include the Edina Realty mark to generate its sponsored link advertisement.  Based on the plain meaning of the Lanham Act, the purchase of search terms is a use in commerce.

No Fair Use

MLS Online also sought dismissal of the trademark infringement claims advanced against it on the ground that its use was a permitted nominative fair use.  Adopting the test for nominative fair use set forth in the Third Circuit's decision in Century 21 Real Estate Corp. v. Lendingtree Inc., 425 F.3d 211 (3rd Cir. 2005), a defendant's use is a nominative fair use when:

(1) the use of plaintiff's mark is necessary to describe both the plaintiff's product or service and the defendant's product or service;

(2) the defendant uses only so much of the plaintiff's mark as is necessary to describe plaintiff's product; and

(3) that the defendant's conduct or language reflect the true and accurate relationship between plaintiff and defendant's products or services.

MLS Online failed to meet that burden here.  The Court held that it was not necessary for MLS Online to use plaintiff's mark to describe its services, or the content of its website.  Nor did a particular sponsored link that MLS Online authored for Yahoo, which displayed plaintiff's trademark in its headline, and defendant's name in a much smaller font at the bottom of the ad, reflect the true and accurate relationship between the parties.  Said the Court:

The Court holds that defendant's use of the Edina Realty mark does not constitute nominative fair use as a matter of law.  Defendant uses the mark as an Internet search term, in its Sponsored Link advertisements, and in hidden text and hidden links on its website.  None of these uses requires the Edina Realty mark.  In its advertisements and hidden links and hidden text, defendant could easily describe the contents of its website by stating that it includes all real estate listings in the Twin Cities.  Similarly, defendant could rely on other search terms, such as Twin Cities real estate, to generate its advertisement.  In addition, defendant's use of the Edina Realty mark in its advertisement does not reflect the true relationship between plaintiff and defendant.  Defendant's advertisement that has appeared on Yahoo, for example, places the Edina Realty mark in the headline, which is underlined and in bold font.  The name of defendant's company is listed in much smaller font at the bottom of the ad.  Defendant could have done more to prevent an improper inference regarding the relationship.

Trademark Dilution Claims Dismissed

The Court did dismiss trademark dilution claims advanced by plaintiff because of its failure to "provide [ ] evidence of actual dilution."  According to the Court, "plaintiff has presented no evidence that the ability of the Edina Realty mark to serve as a unique identifier of plaintiff's services has been weakened."  This decision seems at odds with the Court's holding in Moseley v. V Secret Catalogue, 537 U.S. 418 (2003) where the Court noted that "direct evidence of dilution such as consumer surveys will not be necessary if actual dilution can reliably be proven through circumstantial evidence - the obvious case is one where the junior and senior marks are identical."  As noted above, MLS Online has used plaintiff's mark, both in advertisements and on its website.  The Court nonetheless dismissed the dilution claims because of the absence of "evidence of actual dilution."